[Suggestion] Cap Late Fees and Interest on Loans

Discussion in 'Suggestions' started by UnitedStates2, Jan 27, 2016.

  1. UnitedStates2

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    Cap loan interest to 100% of the initial loan per month and to 25k/day, and cap late fees to 100% of the initial payment at max. Anything more than that is just predatory lending and it increases the risk of the lender getting scammed. Oh, and if the total repayment would be under 50k, no interest cap.

    If a user decides to go over the cap, they can enforce only the cap of late fees/interest.

    Anyway, here's a Q&A for the suggestion as people seem to be repeating the same points.

    Q: This is a free market! Why should the server be telling us how to make our loans???
    A: Firstly, no this isn't a free market. ECC is a mixed economy as it has regulations and intervention, such as /sell hand and enforcement of economy-related complaints.

    Q: The server has no right to tell us how to make our loans! Why should they be infringing on our rights??
    A: The server has every right to - as long as it isn't violating Canadian or International laws, they have to do whatever they want. By saying something like that, you obviously have no idea what a right is.

    Q: This is already enforced. Why do we need rules regarding this?
    A: It's arbitrarily enforced - There isn't any clear line of what's a predatory loan, and what isn't. We need to draw a line.

    Q: What if I give out multiple loans or (insert other loophole here.)
    A: You're bending the rules - that's illegal.
     
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    #1 UnitedStates2, Jan 27, 2016
    Last edited: Jan 29, 2016
  2. bobman3355

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  3. UnitedStates2

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    Elaborate?
     
  4. bobman3355

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    if people wanna do crazy high late fees and risk getting scammed that should be allowed to. If people wanna agree to dumb contracts they should be allowed to its a free market.
     
  5. Coolslammer3

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    Definitely agree to this, there is way to many predator loan sharks on ecc. This will also help to decrease the financial gap between players.
     
  6. UnitedStates2

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    The funny part is though, ECC isn't a free market. If we were truly a free market, there'd be no loan scamming enforcement (Intervention!!!), no sell hand (Regulation!!) and such.

    Free markets sound good in concept, but they're unfeasible. ECC is a mixed economy like the large, large majority of the world IRL.

    In other words, a true free market doesn't exist (Unless, we're in Somolia, AMIRITE LADS?)
     
    #6 UnitedStates2, Jan 27, 2016
    Last edited: Jan 27, 2016
  7. kukelekuuk

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    Yeah, because 10-14 year olds can think for themselves, right?

    Exorbitant late fees do absolutely nothing good for anyone involved. Why should they be allowed?
     
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  8. RyanBlocks2

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    This is an awful idea, there is no reason to limit what people can do with their money. Blaming the lender for high fees is ridiculous, people signed the contract and its their responsibility to pay it. If you sign a contract saying youll pay back 200k from 50k and 100k/day late fees then you most defiantly don't belong on an economy server. Go try creative, sorry. Not to mention the guidelines you put out stop some very legitimate deals from being allowed.

    Congrats, this is the worst thing I have read all day today. Have a cookie.
    First off many 10-14 year olds can indeed think for themselves. While collectively there are more 10-14 year olds who make bad decisions I can assure you that a lot of them are smart enough to know a bad deal when they see it.
    Second of all, if someone cant think for themselves will we start imposing restrictions on all kinds of deals to make it so they arent taken advantage of? Will we not allow people to sell goods at prices they want because this poor kid doesn't understand its a bad deal and he'll be taken advantage of. On an economy server, people who arent that bright will always be taken advantage of. Now im not saying its a nice thing to do, I certainly dont take advantage of people but no amount of increased regulation will solve the problem.

    TLDR: The last thing we need is more complex rules. Didn't you just post a suggestion for simplifying the rules and now you have one to add yet another complex set of rules?
     
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    #8 RyanBlocks2, Jan 27, 2016
    Last edited: Jan 27, 2016
  9. ldw116

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    Well it is already illegal to loan crazy high... not sure why we need this.
     
  10. UnitedStates2

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    There isn't any consistent guidelines on what a "predatory loan" is - Right now, the system is completely arbitrary which isn't good. I'm proposing to create consistent guidelines on what these "predatory loans" are.
     
  11. Nicit6

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    ECC isn't actually a free market. Free markets don't have government interaction at all, and ECC has a pretty major source of that (/sell)

    I can only see two reasons why one might oppose this:
    - Being a loan shark.
    - Pointlessly hating regulation of any kind regardless of effect.

    I really don't see how this can have any other effect than a positive one.
     
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  12. LJKAzrael

    LJKAzrael Freelancer | Ikigai
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    -1 Find a better lender. Don't be stupid. You can't protect people from their own stupidity.


    100% interest max? What about loans over long terms, such as 2-3 months? 100k loaned with 200k in 3 months, no.

    Ridiculous late fees? How about just paying on time (crazy right?). Maybe negotiate with the lender. Perhaps, go to one of the many other lenders for a better rate.

    If staff determine the loan or its interest to be "predatory", it will not be enforced. The current system works. There are few truly predatory loans, and the staff handles them appropriately. The rules currently address this issue adequately. There is no need to impose unnecessary regulation.

    There isn't a "one size fits all" solution. Larger loans should have higher late fees. 1 mil loaned with late fees of 10k per day, reasonable. 10k loaned with the same 10k fee per day late, ridiculous. How, would these be solved? By the current system already in place that protects players from this. 10k loaned; 20k payback in 2 weeks, reasonable. 1 mil loaned; 2 mil payback in 2 weeks, unreasonable.


    In summary, I understand your reasoning, but this is something that shouldn't be. I would like to keep this economic simulation from becoming a fascist system. Keep it as the benevolent dictatorship with underlying capitalist principles that it is.

    PS
    In order to proactively address any personal attacks, I will say this. How do I determine my payback and interest? I ask the player to whom I am lending what they believe would be fair to me and reasonable to them. As for late fees, I charge 1k or 3k per day for 1 week after it is due, depending on the size of the loan. I usually waive these fees unless they are very late.
     
    #12 LJKAzrael, Jan 27, 2016
    Last edited: Jan 27, 2016
  13. ldw116

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    I agree, but these caps are too low and there is such a wide range of loans.

    For instance. (The most recent example) my loan to Noah was crazy and not well thought out. It was late at night and I should have never done it. HOWEVER is there anything wrong with a 1k loan with a 3k payback?
     
  14. Sheep_mage

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    -1
    This is not needed. As a person who does loans from time to time I know that some users are more risky to loan to than others. I should have the freedom to make contracts as I see fit with my money. Had trouble in the past with loan payments? Fine, you pay more interest and the penalties for defaulting are higher. As a person borrowing, you always have the right to refuse the contract. All this regulation will accomplish is a shrink in the available loans. If you do not like the terms on a loan, negotiate or shop elsewhere. The responsibility to repay is ultimately yours.
     
  15. ldw116

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    Yah but you don't...
     
  16. Sheep_mage

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    [edit] I figured it out.
     
    #16 Sheep_mage, Jan 27, 2016
    Last edited: Jan 27, 2016
  17. ldw116

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    What?
     
  18. Nicit6

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    That's easily fixed though. They're not my personal idea of perfect either.

    I would say a better guideline would be:

    Loans with a principle + interest of < $25,000 aren't regulated apart from late fees, limited to:
    - No more than 100% of total principle + interest may be charged in late fees.

    All other loans:
    - Interest must not exceed 100% per month.
    - Late fees may not exceed 100% of the original principle.

    It's not meant to actually limit viable deals. Just some reasonable guidelines to prevent abuse of the system.
     
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  19. Mission001

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    No you do....

    -1
    A. Look around for a better loan deal, lots of people do them and at different rates
    B. Wait and earn the money yourself.
    C. Do your contracts on the forum and then a moderator can check them out and if the overdue dates and penalties are too high, then something will be said because there is a rough limit i believe staff go by when doing late fee's and such,
    Sure it could be a written rule, but common sense pretty much sums this up.
     
  20. ldw116

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    This makes more sense